SECOND DIVISION

[G.R. No. 96551. November 4, 1996.]

PREMIUM MARBLE RESOURCES, INC. , petitioner, vs . THE COURT OF

APPEALS and INTERNATIONAL CORPORATE BANK , respondents.

PRINTLINE CORPORATION, petitioner, vs . THE COURT OF APPEALS

and INTERNATIONAL CORPORATE BANK, respondents.

Arnulfo F. Dumadag for petitioner.

Fe Magalino & Associates for private respondents.

SYLLABUS

1. COMMERCIAL LAW; CORPORATION CODE; CORPORATIONS; POWER TO SUE

AND BE SUED, LODGED WITH THE BOARD OF DIRECTORS. — The power of the corporation
to sue and be sued in any court is lodged with the board of directors that exercises its
powers. Thus, the issue of authority and the invalidity of plaintiff-appellant's subscription
which is still pending, is a matter that is also addressed, considering the premises, to the
sound judgment of the Securities & Exchange Commission. cdasia

2. ID.; ID.; ID.; REQUIRED TO SUBMIT TO SEC WITHIN 30 DAYS AMONG OTHERS,
THE NAMES OF DIRECTORS, TRUSTEES AND OFFICERS ELECTED; PURPOSE. — By the
express mandate of the Corporation Code (Section 26), all corporations duly organized
pursuant thereto are required to submit within the period therein stated (30 days) to the
Securities and Exchange Commission the names, nationalities and residences of the
directors, trustees and o cers elected. Evidently, the objective sought to be achieved by
Section 26 is to give the public information, under sanction of oath of responsible o cers,
of the nature of business, nancial condition and operational status of the company
together with information on its key o cers or managers so that those dealing with it and
those who intend to do business with it may know or have the means of knowing facts
concerning the corporation's financial resources and business responsibility.
3. ID.; ID.; ID.; NO PERSON, IN THE ABSENCE OF AUTHORITY FROM THE BOARD
OF DIRECTORS, CAN VALIDLY BIND THE CORPORATION; ACTION FOR DAMAGES FILED
BY CORPORATION WITHOUT RESOLUTION OF THE BOARD OF DIRECTORS. — The lower
court nds that the o cers represented by Atty. Dumadag do not as yet have the legal
capacity to sue for and in behalf of the plaintiff corporation and/or the ling of the present
action (Civil Case 14413) by them before Case No. 2688 of the SEC could be decided is a
premature exercise of authority or assumption of legal capacity for and in behalf of
plaintiff corporation. "The issues raised in Civil Case No. 14444 are similar to those raised
in Civil Case No. 14413. This Court is of the opinion that before SEC Case No. 2688 could
be decided, neither the set of o cers represented by Atty. Dumadag nor that set
represented by the Siguion Reyna, Montecillo and Ongsiako Law O ce, may prosecute
cases in the name of the plaintiff corporation. It is clear from the pleadings led by the
parties in these two cases that the existence of a cause of action against the defendants is
dependent upon the resolution of the case involving intra-corporate controversy still
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 pending before the SEC." On appeal, the Court of Appeals a rmed the trial court's Order
which dismissed the consolidated cases. We agree with the nding of public respondent
Court of Appeals, that "in the absence of any board resolution from its board of directors
the [sic] authority to act for and in behalf of the corporation, the present action must
necessarily fail. The claim of petitioners as represented by Atty. Dumadag, that Zaballa, et
al., are the incumbent o cers of Premium has not been fully substantiated. In the absence
of an authority from the board of directors, no person, not even the o cers of the
corporation, can validly bind the corporation. TcEAIH

DECISION

TORRES , JR ., J : p

Assailed in the instant petition for review is the decision 1 of the Court of Appeals
in CA-G.R. CV No. 16810 dated September 28, 1990 which a rmed the trial court's
dismissal of petitioner's complaint for damages.
The antecedents:
On July 18, 1986, Premium Marble Resources, Inc. (Premium for brevity), assisted
by Atty. Arnulfo Dumadag as counsel, led an action for damages against International
Corporate Bank which was docketed as Civil Case No. 14413. The complaint states, inter
alia:
"3. Sometime in August to October 1982, Ayala Investment and
Development Corporation issued three (3) checks [Nos. 097088, 097414 & 27884]
in the aggregate amount of P31,663.88 payable to the plaintiff and drawn against
Citibank;

xxx xxx xxx

"5. On or about August to October 1982, former o cers of the plaintiff

corporation headed by Saturnino G. Belen, Jr., without any authority whatsoever
from the plaintiff deposited the above-mentioned checks to the current account of
his conduit corporation, Intervest Merchant Finance (Intervest, for brevity) which
the latter maintained with the defendant bank under account No. 0200-02027-8;

6. Although the checks were clearly payable to the plaintiff corporation

and crossed on their face and for payee's account only, defendant bank accepted
the checks to be deposited to the current account of Intervest and thereafter
presented the same for collection from the drawee bank which subsequently
cleared the same thus allowing Intervest to make use of the funds to the prejudice
of the plaintiff;

xxx xxx xxx

"14. The plaintiff has demanded upon the defendant to restitute the
amount representing the value of the checks but defendant refused and continue
to refuse to honor plaintiff's demands up to the present;

"15. As a result of the illegal and irregular acts perpetrated by the

defendant bank, the plaintiff was damaged to the extent of the amount of
P31,663.88;"
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 Premium prayed that judgment be rendered ordering defendant bank to pay the amount of
P31,663.88 representing the value of the checks plus interest, P100,000.00 as exemplary
damages; and P30,000.00 as attorney's fees.
In its Answer International Corporate Bank alleged, inter alia, that Premium has no
capacity/personality/authority to sue in this instance and the complaint should, therefore,
be dismissed for failure to state a cause of action.
A few days after Premium led the said case, Printline Corporation, a sister
company of Premium also led an action for damages against International Corporate
Bank docketed as Civil Case No. 14444. Thereafter, both civil cases were consolidated.
Meantime, the same corporation, i.e., Premium, but this time represented by Siguion
Reyna, Montecillio and Ongsiako Law O ce as counsel, led a motion to dismiss on the
ground that the ling of the case was without authority from its duly constituted board of
directors as shown by the excerpt of the minutes of the Premium's board of directors'
meeting. 2
In its opposition to the motion to dismiss, Premium thru Atty. Dumadag contended
that the persons who signed the board resolution namely Belen, Jr., Nograles & Reyes, are
not directors of the corporation and were allegedly former o cers and stockholders of
Premium who were dismissed for various irregularities and fraudulent acts; that Siguion
Reyna Law o ce is the lawyer of Belen and Nograles and not of Premium and that the
Articles of Incorporation of Premium shows that Belen, Nograles and Reyes are not
majority stockholders.
On the other hand, Siguion Reyna Law rm as counsel of Premium in a rejoinder,
asserted that it is the general information sheet led with the Securities and Exchange
Commission, among others, that is the best evidence that would show who are the
stockholders of a corporation and not the Articles of Incorporation since the latter does
not keep track of the many changes that take place after new stockholders subscribe to
corporate shares of stocks.
In the interim, defendant bank led a manifestation that it is adopting in toto
Premium's motion to dismiss and, therefore, joins it in praying for the dismissal of the
present case on the ground that Premium lacks authority from its duly constituted board
of directors to institute the action.
In its Order, the lower court concluded that:
"Considering that the o cers (directors) of plaintiff corporation
enumerated in the Articles of Incorporation, led on November 9, 1979, were 'to
serve until their successors are elected and quali ed' and considering further that
as of March 4, 1981, the o cers of the plaintiff corporation were Alberto
Nograles, Fernando Hilario, Augusto Galace, Jose L.R. Reyes, Pido Aguilar and
Saturnino Belen, Jr., who presumably are the o cers represented by the Siguion
Reyna Law Firm, and that together with the defendants, they are moving for the
dismissal of the above-entitled case, the Court nds that the o cers represented
by Atty. Dumadag do not as yet have the legal capacity to sue for and in behalf of
the plaintiff corporation and/or the ling of the present action (Civil Case 14413)
by them before Case No. 2688 of the SEC could be decided is a premature
exercise of authority or assumption of legal capacity for and in behalf of plaintiff
corporation.

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 "The issues raised in Civil Case No. 14444 are similar to those raised in
Civil Case No. 14413. This Court is of the opinion that before SEC Case No. 2688
could be decided, neither the set of o cers represented by Atty. Dumadag nor
that set represented by the Siguion Reyna, Montecillo and Ongsiako Law O ce,
may prosecute cases in the name of the plaintiff corporation.
"It is clear from the pleadings led by the parties in these two cases that
the existence of a cause of action against the defendants is dependent upon the
resolution of the case involving intra-corporate controversy still pending before
the SEC." 3

On appeal, the Court of Appeals a rmed the trial court's Order 4 which dismissed
the consolidated cases. Hence, this petition.
Petitioner submits the following assignment of errors:
I

"The Court of Appeals erred in giving due course to the motion to dismiss
led by the Siguion Reyna Law O ce when the said motion is clearly led not in
behalf of the petitioner but in behalf of the group of Belen who are the clients of
the said law office

II
"The Court of Appeals erred in giving due course to the motion to dismiss
led by the Siguion Reyna Law O ce in behalf of petitioner when the said law
o ce had already appeared in other cases wherein the petitioner is the adverse
party.

III
"The Court of Appeals erred when it ruled that undersigned counsel was
not authorized by the Board of Directors to file Civil Case Nos. 14413 and 14444.
IV

"The Court of Appeals erred in concluding that under SEC Case No. 2688
the incumbent directors could not act for and in behalf of the corporation.
V

"The Court of Appeals is without jurisdiction to prohibit the incumbent

Board of Directors from acting and ling this case with the SEC where SEC Case
No. 2688 is pending has not even made the prohibition."

We find the petition without merit.

The only issue in this case is whether or not the ling of the case for damages
against private respondent was authorized by a duly constituted Board of Directors of the
petitioner corporation.
Petitioner, through the rst set of o cers, viz., Mario Zavalla, Oscar Gan, Lionel
Pengson, Jose Ma. Silva, Aderito Yujuico and Rodolfo Millare, presented the Minutes 5 of
the meeting of its Board of Directors held on April 1, 1982, as proof that the ling of the
case against private respondent was authorized by the Board. On the other hand, the
second set of o cers, viz., Saturnino G. Belen, Jr., Alberto C. Nograles and Jose L.R. Reyes,
presented a Resolution 6 dated July 30, 1986, to show that Premium did not authorize the
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 filing in its behalf of any suit against the private respondent International Corporate Bank.
Later on, petitioner submitted its Articles of Incorporation 7 dated November 6,
1979 with the following as Directors: Mario C. Zavalla, Pedro C. Celso, Oscar B. Gan, Lionel
Pengson, and Jose Ma. Silva.
However, it appears from the general information sheet and the Certi cation issued
by the SEC on August 19, 1986 8 that as of March 4, 1981, the o cers and members of
the board of directors of the Premium Marble Resources, Inc. were:
Alberto C. Nograles — President/Director
Fernando D. Hilario — Vice President/Director
Augusto I. Galace — Treasurer
Jose L.R. Reyes — Secretary/Director
Pido E. Aguilar — Director
Saturnino G. Belen, Jr. — Chairman of the Board.
While the Minutes of the Meeting of the Board on April 1, 1982 states that the newly
elected o cers for the year 1982 were Oscar Gan, Mario Zavalla, Aderito Yujuico and
Rodolfo Millare, petitioner failed to show proof that this election was reported to the SEC.
In fact, the last entry in their General Information Sheet with the SEC, as of 1986 appears to
be the set of officers elected in March 1981.
We agree with the nding of public respondent Court of Appeals, that "in the
absence of any board resolution from its board of directors the [sic] authority to act for
and in behalf of the corporation, the present action must necessarily fail. The power of the
corporation to sue and be sued in any court is lodged with the board of directors that
exercises its corporate powers. Thus, the issue of authority and the invalidity of plaintiff-
appellant's subscription which is still pending, is a matter that is also addressed,
considering the premises, to the sound judgment of the Securities & Exchange
Commission." 9
By the express mandate of the Corporation Code (Section 6), all duly organized
pursuant thereto are required to submit within the period therein stated (30 days) to the
Securities and Exchange Commission the names, nationalities and residences of the
directors, trustees and officers elected.
Sec. 26 of the Corporation Code provides, thus:
"Sec. 26. Report of election of directors, trustees and o cers . — Within
thirty (30) days after the election of the directors, trustees and o cers of the
corporation, the secretary, or any other o cer of the corporation, shall submit to
the Securities and Exchange Commission, the names, nationalities and
residences of the directors, trustees and officers elected. . ."

Evidently, the objective sought to be achieved by Section 26 is to give the public

information, under sanction of oath of responsible o cers, of the nature of business,
nancial condition and operational status of the company together with information on its
key officers or managers so that those dealing with it and those who intend to do business
with it may know or have the means of knowing facts concerning the corporation's
financial resources and business responsibility. 1 0
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 The claim, therefore, of petitioners as represented by Atty. Dumadag, that Zaballa, et
al., are the incumbent o cers of Premium has not been fully substantiated. In the absence
of an authority from the board of directors, no person, not even the o cers of the
corporation, can validly bind the corporation. 1 1
We nd no reversible error in the decision sought to be reviewed. ACCORDINGLY, for
lack of merit, the petition is hereby DENIED.
SO ORDERED.
Regalado, Romero, Puno, and Mendoza, JJ., concur.

Footnotes
1. Thirteenth Division, Herrera, M., J., ponente, Bengzon, Rasul, JJ., concurring.
2. Rollo, p. 56.
3. Rollo, pp. 162-163.
4. Rollo, p. 160.
5. Rollo, pp. 108-109.
6. Rollo, p. 55.
7. Rollo, pp. 65-75.
8. Annexes "A" and "B" to reply to opposition to motion to dismiss; Order, p. 2, Rollo, p. 161.

9. Decision, pp. 4 & 5.

10. HB Humphrey Co. vs. Pollock Roller Runner Sled Co., 278 Mass 350, 180 NE 164; See
also Lopez, R., Corporation Code of the Philippines, p. 446.
11. Visayan vs. NLRC, 196 SCRA 410, G.R. No. 69999, April 30, 1991.

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